1. Field of the Invention
The method and apparatus of the present invention relates to electronic commerce network applications and, more particularly, to a system and method for facilitating a transaction between a plurality of buyers, an intermediary, and a plurality of sellers over an electronic network.
2. Background
The purchase of goods and services in an electronic/telephone network, such as the Internet has gained acceptance by a large segment of the population. Market forecasts indicate that E-commerce will gain widespread usage as a medium for commercial transactions among buyers and sellers. Numerous Internet purchase websites are currently available. The majority of these sites may be classified as seller driven. The traditional retail commerce model is one example of a seller driven protocol characterized by a product offer by a large number of manufacturers to a mass market of consumers via a range of intermediary retail channels (sellers). The retail model is said to be seller driven in that a seller must utilize various methodologies, including advertising, packaging, and pricing, to attract potential buyers. Further, in a seller driven model the seller assumes all risks and costs associated with consummating a sale.
With an ever increasing number of retailers implementing electronic commerce solutions, such as electronic malls, catalogs and auction houses, the seller driven protocol is carried over into that realm. In the electronic commerce model, it is undisputed that the customer exercises a greater degree of control over the transaction as compared to the conventional retail model, however, it is equally undisputed that the protocol remains primarily seller driven.
In single seller-driven systems, a particular seller sets a price and the buyer decides whether he will accept that price. If the buyer happens to be a very large consumer of that particular item, he may be able to negotiate a bulk discount, thereby achieving an effective cost saving. However, the vast majority of retail purchases are fixed price and non-negotiable.
An example of a commerce system where the seller does not set a fixed, non-negotiable price is an auction. However, the seller still exercises a certain amount of control as he can set a minimum bid or offer the goods subject to a reserve. (See e.g. www.onsale.com) The auction protocol may be characterized as a multi-buyer, single-seller quasi-bidirectional system, in that no single buyer sets the price, it is determined by the group of buyers as a whole. In this protocol buyers are not acting in unison but rather as adversaries, competing against each other for the best `winning` bid and purchase.
A buyer-driven system is one in which the buyer is looking for the seller of a particular goods or service. It is the buyer who sets the terms of the sale. In this case, the buyer assumes most of the costs and risks in consummating the deal, but now is able to exercise more control in the specification of product required and the price he is willing to pay. For example, a buyer through the classified section seeks an apartment to rent or a house to buy in a specific neighborhood at a specified price.
Buyer-driven protocols are available on the Internet. (See, e.g. www.priceline.com) . These protocols allow buyers to define a conditional purchase offer. The buyer selects the particular item he wishes to purchase, adds any conditions he wishes to place on the purchase and specifies a price at which he will purchase. He then transmits this conditional purchase offer to a central computer. Suppliers then search a list of conditional purchase offers and select the ones they are willing to bind. In effect, the site owner provides a mechanism for binding the buyer and seller to an electronic contractual agreement.
The problem with the above system is that the buyer is now accepting all the risk in determining a fair price for the goods and services he requires. If he provides a low bid, no seller would choose to bind his contract. On the other hand, if he overbids, sellers would jump at the opportunity to enter into a binding contract with him. Also, if he overspecifies the conditions of his offer, he may never be able to find a seller willing to offer him the goods. Currently, Priceline.com allows buyers to specify the day they are willing to fly but not the particular time/flight they require. Thus buyers may be bound to accept a connecting flight at 6 a.m. U.S. Pat. No. 5,794,207 to Walker et al. describes a protocol seen on Priceline.com. The disclosure of the '207 patent is incorporated by reference herein.
In a buyer driven system, it is well known that through the principles of supply and demand, a buyer who can buy in bulk can command a better leverage in negotiating a better price. For example, buyers from Costco or Kmart can likely negotiate a better price for a particular goods from a manufacturer because of the large quantities they can purchase, especially on commodities or commodity services (such as detergents, insurance plans or even automobiles). However, individual consumers do not have the buying power or resources to effectively participate in such bilateral buyer-driven systems.
A buyers club concept, e.g. Costco, where buyers pay a membership fee to join a club to pool the buying power of members, supposedly allows the buyer to achieve some cost saving. However, the club (the intermediary) still acts as a seller, in that it selects the goods to purchase and offers those goods to members at a discounted price. In reality this is still a seller protocol.
Despite all the advances in technology, the applicant is not aware of a commercially viable bilateral multi buyer-driven multi-seller system. That is, a system in which buyers would pool purchase orders of like kind to achieve the buying power and leverage of in-bulk buying. Depending on the size of the pool, there may be a requirement for several sellers to bid on subsets of the pooled purchase order ("PPO"). The net result is that buyers always achieve a better deal (pricing or services) than if they had entered into the contract individually.
A key element in achieving success is the ability to bind the individual buyer to the pool before the purchase is made. If buyers could participate in the pool and only decide whether they wish to purchase the goods once they have been given a price, it becomes impossible to guarantee the price since the volume changes depending on the number of buyers remaining in the pool.
There is also a need for a third party to administer such bilateral multi buyer-driven system. The third party can administer an Internet site where buyers can aggregate their orders into a large pooled purchase order. Also, this third party can act as an agent for all the buyers and achieve economies of purchasing usually only achieved by large retailers or corporations. Also, a central site for the global purchase order facilitates a venue for sellers to search for appropriate orders to bid on.
Therefore, it is one object of the present invention to set forth a system of bilateral multi buyer-driven electronic commerce that offers the capability for individual buyers to aggregate their purchase orders into pooled orders to potential sellers to bid on.
Another object of the present invention is to allow an intermediary to bind all buyers to the pool before the sale or bidding occurs.
Another object of the present invention is to allow an intermediary to bind the seller who meets the terms of the pooled purchase order to the seller's fulfillment of that order.
It is another object of the present invention for the intermediary to guarantee payment to the seller, with payment occurring at or after delivery of the goods or called for in the pooled purchase order.
It is yet another object of the present invention to allow either buyers or sellers to remain anonymous whereby characteristics and profile information on buyers or sellers are shielded from others such as marketing personnel or credit card companies.
A further object of the invention is to provide a system in which the identity of the buyer is authenticated along with the integrity of the buyer's purchase order.
Another object of the invention is to provide a system in which the identity of the seller is authenticated to determine the seller's capacity to satisfy the conditions of the purchase order.
It is another object of the present invention to allow for pooled purchase orders where multiple sellers may jointly bid to fulfill the purchase order.
These and other objects of the invention will he apparent to those skilled in the art from the following detailed description of the invention, the accompanying drawings and the appended claims.